On a Thursday morning in Kuala Lumpur, the ringgit began the day a little firmer against the American dollar, quoted at 3.9100/9230, even as the greenback itself grew stronger on the back of unexpectedly robust American job creation. It is a small movement, but it carries a quiet lesson about how a currency can be carried by the confidence of its own home ground even while the wider tide runs the other way. Economists see in the steady domestic figures and the calm outlook for Malaysia a reason for the ringgit to hold its ground, while the sturdy health of the American economy keeps the dollar
Ringgit Opens Higher Against US Dollar on Steady Domestic Confidence
The ringgit rose even as the greenback firmed
Mark
The ringgit rose even though the dollar got stronger. Why is that notable?
Mimi
Because the usual expectation is the opposite. Strong US jobs numbers lifted the dollar index 0.13 per cent to 96.920, yet the ringgit still opened at 3.9100/9230, slightly better than Wednesday's close.
Luke
Slightly is the word to hold onto. The gain against the dollar is tiny, and the opening quote is a snapshot at 8 am, not a trend.
Mark
What was the economist's explanation?
Mimi
Dr Mohd Afzanizam of Bank Muamalat pointed to encouraging domestic data and sustained investor confidence in Malaysia's outlook.
Luke
That's one economist's reading. The article doesn't name the specific Malaysian data points, so we can't check what 'strong' refers to.
Mark
And the US figures?
Mimi
January payrolls were 130,000 against a consensus of 66,000, unemployment eased to 4.3 per cent, and participation rose to 62.5 per cent.
Luke
Those are reported figures. His view that the Fed will hold rates and that inflation stays above two per cent is a forecast, not a fact. The same goes for his range of RM3.91 to RM3.93.
Mark
Did the ringgit gain across the board?
Mimi
Nearly. It was higher against the yen, pound, euro, rupiah, baht and Singapore dollar, and roughly flat against the Philippine peso.
Luke
Worth remembering these are opening quotes. Whether they hold through the day, the piece doesn't say.
Der Puls
- The ringgit opened a touch higher at 3.9100/9230, slipping ahead of a dollar that was firming on strong American jobs numbers.
- US payrolls for January roared to 130,000 against a forecast of 66,000, pushing the dollar index up to 96.920 and tightening the pressure on the ringgit.
- Analysts at Bank Muamalat expect the pair to stay within a narrow RM3.91 to RM3.93 band, with the Fed likely to keep rates steady.
- Traders may cash in some gains around the payroll release, so the ringgit's early strength could be tested before the day is out.
- Against the yen, pound and euro the ringgit also advanced, while the Philippine peso alone stayed flat, leaving the regional picture broadly calm.
On a Thursday morning in Kuala Lumpur, the ringgit began the day a little firmer against the American dollar, quoted at 3.9100/9230, even as the greenback itself grew stronger on the back of unexpectedly robust American job creation. It is a small movement, but it carries a quiet lesson about how a currency can be carried by the confidence of its own home ground even while the wider tide runs the other way. Economists see in the steady domestic figures and the calm outlook for Malaysia a reason for the ringgit to hold its ground, while the sturdy health of the American economy keeps the dollar buoyant and the Federal Reserve in no hurry to cut rates.
At 8 am in Kuala Lumpur on Thursday, the ringgit was quoted at 3.9100/9230 against the US dollar, slightly stronger than the previous evening's close. The move was notable because the greenback itself was firming, and analysts paid close attention to that contrast.
Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia, told Bernama that encouraging domestic data and steady investor confidence in Malaysia's outlook were sustaining demand for the currency. He expected the pair to trade between RM3.91 and RM3.93 during the day.
The dollar's rise had a clear source. Strong American labour figures lifted the US Dollar Index to 96.920, as January payrolls reached 130,000 against an expected 66,000. Mohd Afzanizam read this as resilience in the US economy, and suggested the Federal Reserve would likely hold interest rates steady given persistent inflation. He also warned that traders might take some profit around the release.
Across the region, the ringgit gained against the yen, pound and euro, and improved against the rupiah, baht and Singapore dollar. Only the Philippine peso showed little change. The narrow expected band suggests the day's question is whether American data and profit-taking pull the ringgit back, or whether domestic confidence keeps it near its opening level.
At 8 am in Kuala Lumpur on Thursday, the ringgit was quoted at 3.9100/9230 against the US dollar, a touch stronger than Wednesday's close of 3.9110/9170. The move came even as the greenback was firming, which is the part analysts found worth noting.
Dr Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat Malaysia Bhd, told Bernama that encouraging domestic economic data and steady investor confidence in Malaysia's macroeconomic outlook were continuing to underpin demand for the currency. In his words, strong data points would keep interest in the ringgit intact. He expected the dollar-ringgit pair to move within a range of RM3.91 to RM3.93 during the day.
The dollar's strength has a clear source. Stronger-than-expected US labour market figures lifted the US Dollar Index by 0.13 per cent to 96.920 points, which Mohd Afzanizam read as a sign of resilience in the American economy. US nonfarm payrolls for January came in at 130,000, well above the consensus estimate of 66,000. The US unemployment rate eased to 4.3 per cent from 4.4 per cent, and the labour force participation rate edged up to 62.5 per cent from 62.4 per cent.
He drew a conclusion about US monetary policy from those numbers. With the economy holding up and inflation likely to stay above the two per cent target, he said, the US Federal Reserve would be inclined to keep interest rates steady. He added that traders might be tempted to take some profit around the release of the payroll data.
Against other major currencies, the ringgit also opened higher. Versus the Japanese yen it was at 2.5514/5600, from 2.5527/5566 at Wednesday's close. Against the British pound it rose to 5.3266/3443 from 5.3561/3643, and against the euro it strengthened to 4.6431/6586 from 4.6611/6683.
Within Southeast Asia the picture was similar. The ringgit went up against the Indonesian rupiah to 232.9/233.7 from 233.0/233.4, and improved versus the Thai baht to 12.5728/6227 from 12.5808/6062. Against the Singapore dollar it was at 3.0980/1086, compared with 3.0990/1040 previously. The exception was the Philippine peso, where the ringgit was almost flat, opening at 6.71/6.73 from 6.71/6.72.
The day's expected band of RM3.91 to RM3.93 gives a sense of how narrow the room for movement is. The thing to watch is whether the strong US jobs data and profit-taking by traders pull the pair toward the upper end of that range, or whether domestic confidence keeps the ringgit near its opening level.
Bemerkenswerte Zitate
Strong data points for the Malaysian economy would also keep interest intact in the ringgit.— Dr Mohd Afzanizam Abdul Rashid, chief economist, Bank Muamalat Malaysia Bhd
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